What is a single line super trend indicator? It’s a technical indicator used on MT4 terminal or other similar platform, which depicts trend calculations as a single line.
On the chart, this type of trend representation usually takes the form of a single thick line running along the price action.
Depending on the timeframe and the presence of trends, the single trendline will change into two colors: one indicating an uptrend, and a different one indicating a downtrend.
As seen in the example below.
Most supertrend indicators, such as the one seen in the picture, have the option to modify the color of a downtrend and uptrend in the indicator’s settings.
In addition to being able to modify the visual aspects of a supertrend indicator, such as colors and width of the trend line, there will often be other options available in the settings.
Depending on the calculations and input parameters of the indicator, users will have the option to modify the initial parameters and adapt the resulting calculations to their trading preferences.
Trend change in a single line indicator
As soon as the indicator detects a trend change with its unique calculations, the single trendline changes color.
This could indicate a possible change in market sentiment and a trend reversal. It could also signal a longer continuation of an opposite trend.
A supertrend single line indicator can be very helpful for the average trader. It can provide them with possible entry and exit points in the market. It can also provide them with a general overview and a true picture of price movements without the market noise. Simply put, a single line trend indicator will smooth out the dynamic price action.
However, trading a single line trend indicator solely based on trend changes can be risky, if it is not supported with signals from price action patters, such as the hammer candlestick, for example.
How a single line trend indicator works
Most single line trend indicators will use calculations based on two or more moving averages and their crossovers. Let’s look at a very basic setup. Instead of seeing two moving averages, a fast MA of 5 and a slow MA of 50, you would only actually see the slow MA 50 on the chart as a single line.
Whenever the fast MA 5 crosses the 50 MA, the color of the 50 MA will change.
If the fast MA crosses the slow 50 MA upwards, the single line trend indicator will show a bullish trend color. When the fast 5 MA crosses the slow 50 MA downwards, the single line will show a bearish trend color.
On each MA crossover the color of the single line would change and a signal could be generated. This could be in a form of a directional arrow on the chart or a signal sent to a mobile device or email.
This is of course a very general description of a single line trend indicator based on multiple moving averages. Some other supertrend indicators can be based on completely different calculations utilizing other aspects of technical analysis.
A more professional trend indicator could have additional calculations and features, such as trend filters, other built-in indicators, price patterns detection, and more flexible configuration options.